April 20, 2011
Which day trade is higher risk?
– Which is higher risk? Long or short?
o We use specific trade patterns and entry rules to determine which direction is a higher % or higher risk trade
o Sideways Range:
§ At the highs, look to sell (High % short)
§ At the lows, look to buy (high % is the long)
o Price Channel:
§ At the highs, look to sell (High % short)
§ At the lows, look to buy (high % is the long)
o Price Wedge
§ At the highs, look to sell (High % short)
§ At the lows, look to buy (high % is the long)
§ For the channel, wedge, and the sideways range, the higher RISK trade is buying at the highs and selling at the lows
o FYI: If we are in the MIDDLE of these trading range (channel, sideways, wedge) we consider BOTH SIDES as High Risk because the middle is the chop zone.
o Momentum:
§ Overbought = long trades are high risk
§ Oversold = short trades are high risk
o Size of the orders:
§ Reading tape and watching the specific SIZE of every order that comes into the market, this gives me clues to the BIG MONEY direction.
§ Large size on the SELL side, the LONG position is higher risk
§ Large size on the BUY side, the SELL side is higher risk
§ Higher risk trades are taken in the opposite direction to your BIG ORDERS on the time and sales window.
o Speed of the Orders:
§ I need to read the tape and the speed of those orders coming into the market will tell me clues to who is in control of the market.
§ Rising Speed with big buyers makes the LONG trade the Highest %
· Falling speed with big buyers does NOT qualify as a high %, but is NOT a high risk either
§ Rising Speed with BIG SELLERS makes the SHORT trade higher %,
· Falling speed with BIG SELLERS does not qualify as High %, but its also not higher risk.
§ I can get away with falling speed as long as I have the BIG MONEY ORDERS coming into the market.
§ It may be wise to use caution with slowing speed, but doesn’t disqualify the trade entry if you have compensating factors.
o Show up at the HOD/LOD and any swing high/low
o There’s unlimited areas where token can show up
o Token = false
o Token print = false print, fake-out breakout
§ In today’s example
§ New lower low at the LOD
§ But then the buyers grab it and with excessive speed and size of the orders we bounce off this low
§ At this point, this is nothing more than a bounce
§ When we see this now continue then we have confirmation this is our token
§ Now that we see the token at the lows, and we get feedback from the buyers coming in, we now consider the buyers have taken control
§ This means buying pullbacks, buying on the way up.
o We take profit at the BMT
o Not the best entry location
–
– What if we DO NOT see BIG MONEY?
-We can’t take the trade as high %
